The Economic Survey has pitched for allowing FDI in multi-brand retail, stating it could help tame food inflation and improve agri-commodity management.
Referring to observations of the Inter-Ministerial Group (IMG) on Inflation on improving supply chains from the farmer to the consumer, the Survey has suggested taking perishables out of the ambit of the APMC Act.
Pitching for promotion of inter-state trade by eliminating multiple levies, the Survey suggested developing a farm-to-fork supply system and address investment gaps related to post harvest infrastructure for agricultural produce through FDI in multi-brand retail. Such a move may help in improving agriculture commodities, it said.
The IMG, in a position paper, had pointed that often tomato farmers got a price of Rs 3 per kg, while consumers paid Rs 15 per kg. The IMG had recommended amendment to APMC Act to cut down on large middleman price margin. Allowing FDI in multi-brand retail was one of the ways to improve supply chain and benefit farmers. Such a move would reduce the price margin between farm gate and retail, while the overall size of the retail business would increase sufficiently, so as to benefit middle traders by virtue of larger volume of business.
The Survey also favoured creation of additional storage facilities to be more self-sufficient in food grains. Such a move will help to build stocks in years of bounty and offload them in years of shortage – a key initiative to stabilise year-on-year prices. Besides, it will also help procure and store more basic food grains in order to make them available to poor and vulnerable households through various programmes.
The food grain output is projected to touch a record high of 250 million tonnes this year. Forecasting a 2.5 per cent growth for agriculture and allied sectors in 2011-12, down from 7 per cent in 2010-11, the Survey said that area under food grain production has declined over the last three decades. The share of agriculture in GDP has declined further to 13.9 per cent in 2011-12, from 14.5 per cent in the previous year.
The agriculture growth in the 11th FiveYear Plan stood at 3.5 per cent against the targeted 4 per cent. The survey calls for concerted and focussed efforts to address stagnating productivity. Further, in a bid to spread farm mechanisation, the survey calls for promoting custom hiring centres or farm service centres so as to enable the smaller farmers take advantage of mechanisation.